eCommerce: Situation Analysis of eBay

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I. Executive Summary
eBay Inc. is an American multinational internet person-to-person corporation that manages eBay.com which an online auction and a shopping website. It was founded by Pierre Omidyar in September1995. eBay’s major competitors are Amazon.com, Yahoo Auctions, and uBid. We, the case analysts, analyzed what are the situations of the company internally and externally. We used Competitive Profile Matrix, SWOT Analysis, and we compared eBay.com to Amazon.com (closest competitor) using their financial ratios . We recommended three alternative solutions to cope up the problems that eBay Inc. facing. We recommended three alternative solutions that can help to solve the problems facing by eBay Inc. __________________________________. However, we choose ____________________

II. Situation Analysis
A. Environment
Economic conditions and trends
Market size is expected to be $1 billion in 2005 from only $665 million users in 2002; this population growth denotes an increase of potential customers for online auctions and retailing in general. In addition, Forrester Research forecasted e-Commerce revenues to be $6.79 trillion in 2004 from only $170 billion in 1999, a 4000% increase. This exponential improvement signifies an economic boom for online businesses. Cultural and social values and trends

The changing lifestyles of people suggest an increasing need for the convenience offered by online auctions and retailing. People are now too busy to have time to go out and shop. Knowing the power of the internet, they turn to their computers instead when they are looking for something they want or need. Political and legal issues

Fraudulent actions from auction users pose as a threat towards eBay’s accountability. Auctions intended to scam bidders may be posted and remain active until detected and deleted by the administration.

Summary of environmental opportunities and threats
Opportunities
* Increasing users of the internet
* Market development in new and emerging markets
* Changing lifestyles of people.
* Market penetration in current markets
* Improving foreign markets especially in Asia
Threats
* Success greatly attracts competition
* Attacks by illegal practices may happen
* Credit card charges can’t be controlled by eBay
* Transportation and courier systems could be poor.
* The risk for future taxation
Implications for Strategy Development
Based on the determined threats and opportunities, eBay can use the following strategies: market development, market penetration, and acquisitions and alliances. Market Development in new and emerging markets in Asia, Latin America, and Eastern Europe can be targeted to maximize potential revenue. Since eBay is online, the company is more than capable of reaching such markets. eBay can use Market Penetration to enhance the features and functionality of their website and expand value added services. Moreover, eBay is financially capable, the firm can use Acquisitions and Alliances on other companies (e.g. Paypal, Skype, search engines, online payment systems, etc.) that could provide leverage to their existing services. To further decrease cost, alliances can be made with the same, provided that both companies benefit. B. Industry

Classification and definition of industry
eBay Inc. manages eBay.com is an online auction. An online auction is a process of buying and selling of goods by offering them up for bid, taking bids, and then selling the item to the highest bidder which held over on the Internet. Online auctions worked the same ways as traditional auctions, the only difference is the process occurred over the internet rather than at a specific location. There are three basic categories of online auctions: business-to-business, business-to-customer, and person-to-person. eBay.com is a person-to-person auction. Analysis of existing competitors

In the CPM, eBay has the highest score followed by Amazon Auctions,...
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